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Car insurance costs fall 14 per cent

Premiums drop by record rate, but could rise again due to changes in industry

Car insurance premiums fell a record 14 per cent over the last year, with the AA putting the drop down to a ‘more fiercely competitive market’ and expectations that bogus whiplash claims will be weeded out.

The typical quote for annual comprehensive car insurance cover was just £533 in January compared to £620 for the same time the previous year, and £854 two years ago.

However, things could soon turn again, according to the company. It claimed that premiums could have been falling too fast ahead of anticipated changes within the industry, and that prices could end up bouncing back up sharply later this year.

The figures, taken by the AA British Insurance Premium Index, found that the North West continues to be the most expensive region to insure a car. The average price for someone who shops around in the region was a costly £809, though it saw the greatest reduction over the past quarter.

Scotland remained the cheapest place in Britain to insure a car, with a shop around cost of just £389 following a 4.9 per cent drop on the previous quarter. Meanwhile, the average premium in Wales is £492 and in London it is £629.

Having faced the highest premiums, motorists aged between 17 and 22 unsurprisingly saw the biggest drop in premiums with a 5.4 per cent fall. However, the average shop around price was still a costly £1,187.

And older drivers continue to be offered the lowest premiums, with those aged between 60 and 69 paying an average price of £302. This age group also benefitted from a price drop in the last quarter of 4.1 per cent.